Methode Electronics, Inc. Reports Second Quarter Fiscal Year 2005 Results
CHICAGO--Dec. 2, 2004--Methode Electronics, Inc. a global manufacturer of electronic component and subsystem devices, today announced operating results for the fiscal 2005 second quarter ended October 31, 2004.Methode reported second quarter fiscal year 2005 net sales of $99.7 million and net income of $6.5 million, or $0.18 per share. This compares with net sales of $94.5 million and net income of $6.5 million, or $0.18 per share, in the second quarter of fiscal year 2004.
Included in the results for the quarter was a charge of $0.8 million, for the impairment of certain assets and other expenses related to the closure of our manufacturing facility in Singapore and $0.5 million for the cost of relocating automotive molding tools from an insolvent supplier, a total of two cents per share. Even with these charges, cost of goods sold as a percentage of sales was reduced one percentage point over last year's same quarter. Customer paid tooling sales this quarter were $1.6 million compared to $3.8 million in the year ago period. Excluding the customer paid tooling, product sales were $98.1 million in this year's second quarter compared to $90.7 million in the same quarter last year.
In the first six months of fiscal 2005, net sales were $184.8 million compared to $172.5 million from the same period last year. Net income was $11.1 million in the first half of this fiscal year or $0.31 per share compared to $10.7 million reported in the first half of fiscal 2004, representing $0.30 per share. Methode achieved a one percentage point reduction in cost of goods sold, as a percentage of sales, for the first six months of fiscal year 2005, compared to last year's first six months. For the first six months of fiscal 2005, tooling sales were $1.9 million compared to $3.9 million in the first six-month period of fiscal 2004. Excluding tooling, product sales for the first six months of fiscal 2005 were $182.9 million compared to $168.6 million in the same period last year.
Commenting on the results, Donald W. Duda, President and Chief Executive Officer for Methode Electronics stated, "We concluded the second quarter in line with our expectations. Our operations are doing well in their continuous improvement efforts, most notably our automotive business. We have begun the initial implementation phase of lean manufacturing processes in additional facilities to further enhance efficiencies. As part of our fiscal 2006 operating plan, we will broadly commence lean manufacturing initiatives across all Methode facilities."
Selling and administrative expense represented 12.8 percent of net sales in the second quarter of fiscal 2005 compared to 11.3 percent in the second quarter of last year. The majority of this increase is due to expenses, such as, amortization of restricted stock awards issued in the first quarter of fiscal 2005, corporate governance and Sarbanes-Oxley compliance initiatives, increased sales costs in the connectivity business and increased research and development costs in automotive.
Methode expects to achieve third quarter fiscal 2005 sales between $80 million and $85 million and earnings per share in the range of $0.10 to $0.12. The Company is modifying its sales guidance for fiscal year 2005 to between $370 million and $380 million, from sales of $385 million previously announced due to weaker domestic vehicle production schedules and reduced tooling sales. Earnings per share remains between $0.65 and $0.70 for the fiscal year.
Conference Call
As previously announced, the Company will conduct a conference call led by its President and Chief Executive Officer, Donald W. Duda, and Chief Financial Officer, Douglas A. Koman, on December 2, 2004 at 10:00 a.m. Central Time. Methode invites you to listen to the webcast of this call by visiting the Company's website at www.methode.com and entering the "Investor Relations" page and then clicking on the "Webcast" icon. You may participate on the conference call by dialing 877-407-8031. A telephone replay of the call will be available for seven days, by dialing 877-660-6853 and using the playback account number 1628 and conference ID number 125508.
About Methode Electronics
Methode Electronics, Inc. is a global manufacturer of electronic component and subsystem devices. Methode designs, manufactures and markets devices employing electrical, electronic, wireless, sensing and optical technologies. Methode's components are found in the primary end markets of the automotive, communications (including information processing and storage, networking equipment, wireless and terrestrial voice/data systems), aerospace, rail and other transportation industries; and the consumer and industrial equipment markets. Further information can be found at Methode's website www.methode.com.
Forward-Looking Statements
Certain statements in this press release dated December 2, 2004, containing information on Methode's second quarter reporting period for fiscal 2005, and offering guidance for its third quarter and full year reporting periods for fiscal 2005, are forward-looking statements that are subject to certain risks and uncertainties. The Company's results will be subject to many of the same risks that apply to the automotive, computer and telecommunications industries, such as general economic conditions, interest rates, consumer spending patterns and technological change. Other factors, which may result in materially different results for future periods, include market growth; operating costs; currency exchange rates and devaluations; delays in development, production and marketing of new products; and other factors set forth from time to time in the Company's Form 10-K and other reports filed with the Securities and Exchange Commission. The forward- looking statements in this press release are subject to the safe harbor protection provided under the securities law. All information in this press release is as of December 2, 2004. Methode undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations
Methode Electronics, Inc.
Financial Highlights
(In thousands, except per share data, unaudited)
Three Months Ended October 31,
2004 2003
--------------- --------------
Net sales $99,743 $94,502
Other income 190 731
Cost of products sold 77,835 75,228
Selling and administrative expenses 12,729 10,669
Income from operations 9,369 9,336
Interest, net 249 52
Other, net (174) 38
Income before income taxes 9,444 9,426
Income taxes 2,935 2,970
Net income 6,509 6,456
Basic and Diluted Earnings per Common
Share $0.18 $0.18
Average Number of Common Shares
outstanding:
Basic 35,699 35,714
Diluted 36,041 36,032
Six Months Ended October 31,
2004 2003
--------------- --------------
Net sales $184,764 $172,460
Other income 845 1,350
Cost of products sold 145,617 138,028
Selling and administrative expenses 24,117 19,789
Income from operations 15,875 15,993
Interest, net 362 239
Other, net (137) (540)
Income before income taxes 16,100 15,692
Income taxes 5,000 4,945
Net income 11,100 10,747
Basic and Diluted Earnings per Common
Share $0.31 $0.30
Average Number of Common Shares
outstanding:
Basic 35,612 35,945
Diluted 35,922 36,219
Certain prior year amounts have been reclassified to conform to the
current year presentation.
Summary Balance Sheets
(In thousands)
October 31, April 30,
2004 2004
--------------- --------------
(Unaudited)
Cash $67,929 $61,757
Accounts receivable - net 66,192 65,360
Inventories 36,064 29,207
Other current assets 12,789 13,031
--------------- --------------
Total Current Assets 182,974 169,355
Property, plant and equipment - net 91,419 87,755
Goodwill - net 21,574 19,559
Intangible assets - net 22,209 24,266
Other assets 13,550 13,253
--------------- --------------
Total Assets $331,726 $314,188
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Accounts and notes payable $26,434 $28,542
Other current liabilities 31,198 28,718
--------------- --------------
Total current liabilities 57,632 57,260
Other liabilities 8,585 8,344
Shareholders' equity 265,509 248,584
--------------- --------------
Total Liabilities and Shareholders'
Equity $331,726 $314,188
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Summary Statements of Cash Flows (Unaudited)
(In thousands)
Six Months Ended October 31,
2004 2003
--------------- --------------
Operating Activities:
Net income $11,100 $10,747
Provision for depreciation and
amortization 10,683 10,078
Other (4,853) (2,743)
--------------- --------------
Net Cash Provided by Operating
Activities 16,930 18,082
Investing Activities:
Purchases of property, plant and
equipment (10,312) (7,378)
Acquisitions (2,671) (1,956)
Collection of note receivable from
related party - 6,000
Other (95) 3
--------------- --------------
Net Cash Used in Investing Activities: (13,078) (3,331)
Financing Activities
Purchase and retirement of Class B
shares - (17,063)
Options exercised 4,456 2,144
Dividends (3,581) (3,608)
Other - (78)
--------------- --------------
Net Cash Provided by (Used in) Financing
Activities 875 (18,605)
Effect of foreign exchange rate changes
on cash 1,445 927
--------------- --------------
Increase (Decrease) in Cash and Cash
Equivalents 6,172 (2,927)
Cash and cash equivalents at beginning
of period 61,757 64,261
--------------- --------------
Cash and Cash Equivalents at End of
Period $67,929 $61,334
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